Friday, September 23, 2005

GAO Report Says Pentagon Misstated Cost Of War on Terror

The Pentagon has no accurate knowledge of the cost of military operations in Iraq, Afghanistan or the fight against terrorism, limiting Congress's ability to oversee spending, the Government Accountability Office concluded in a report released yesterday.

The Defense Department has reported spending $191 billion to fight terrorism from the Sept. 11, 2001, attacks through May 2005, with the annual sum ballooning from $11 billion in fiscal 2002 to a projected $71 billion in fiscal 2005. But the GAO investigation found many inaccuracies totaling billions of dollars.

"Neither DOD nor Congress can reliably know how much the war is costing and details of how appropriated funds are being spent," the report to Congress stated. The GAO said the problem is rooted in long-standing weaknesses in the Pentagon's outmoded financial management system, which is designed to handle small-scale contingencies.

The Pentagon agreed "generally" with the GAO's recommendations, and announced it would take "immediate action" to strengthen procedures for reporting war costs, according to a letter from Undersecretary of Defense Tina W. Jonas.

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"The GAO report confirms what many of us trying to track the cost of the wars in Iraq and Afghanistan have expressed concerns about for some time now: the reliability of DoD's estimates,'' Steven Kosiak, a defense budget analyst for the Washington research organization Center on Strategic and Budgetary Assessments, told Bloomberg.

"After nearly five years of war, one would have expected DoD to have a better handle on these costs,'' Kosiak said. "They should have a strong incentive now for improving their accounting in this area. In the wake of Katrina and the worsening deficit picture, congressional and public scrutiny of war costs is likely to intensify in coming months and years.''

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The report said the Pentagon overstated the cost of mobilized Army reservists in fiscal 2004 by as much as $2.1 billion. Because the Army lacked a reliable process to identify the military personnel costs, it plugged in numbers to match the available budget, the report stated. "Effectively, the Army was reporting back to Congress exactly what it had appropriated," the report said.

The probe also found "inadvertent double accounting" by the Navy and Marine Corps from November 2004 to April 2005 amounting to almost $1.8 billion.

The report turned up aberrations in imminent-danger pay -- $225 a month offered to military personnel serving in Iraq, Afghanistan and other countries -- which had "little correlation with the numbers of deployed personnel." That pay totaled $38 million in April 2004, implying that 170,000 military personnel were receiving it, but by August 2004 it had mushroomed to $231 million, suggesting that more than 1 million U.S. troops were serving in danger zones.